Tag Archives: Individual Mandate

By postponing the employer mandate, Obama has given millions of Americans the legal standing to sue.

By DAVID B. RIVKIN JR. AND LEE A. CASEY

President Obama’s announcement on July 2 that he is suspending the Affordable Care Act’s employer health-insurance mandate may well have exposed his actions to judicial review—even though that is clearly what he sought to avoid.

The health-care reform law’s employer mandate requires businesses with more than 50 employees to provide a congressionally prescribed set of health-insurance benefits or pay a penalty calculated at about $2,000 per employee. The law was to take effect on Jan. 1, 2014, but Mr. Obama has “postponed” its application until 2015. His aim, the administration said, was to give employers more time to comply with the new rules. But it was also seen as a way to avoid paying at least part of ObamaCare’s mounting political price in the 2014 congressional elections.

Whatever the reason, the president does not have the power to stop the implementation of a law. If there is one bedrock constitutional legal principle, it is that the president must “faithfully execute” federal statutes. He cannot suspend laws he dislikes on policy grounds or because he fears their political consequences.

Mr. Obama, however, has made a habit of exercising an unlawful suspending power, refusing to enforce selected federal laws, including various provisions of the immigration laws against young, undocumented aliens; work requirements enacted as part of the 1996 federal welfare reform law; and the testing accountability provisions of the No Child Left Behind education law.

One key problem with suspension power—aside from the fact that it destroys the balance of power between the two political branches—is that, when skillfully exercised, it sidelines the judiciary. The Constitution requires that a party commencing litigation must have what is commonly called “standing,” i.e., the party must have suffered or will suffer a legal injury that a court can redress. A determined president can head off litigation by effectively rewriting federal statutes in ways that do not create individual injuries so no party has standing.

By suspending the Affordable Care Act’s employer insurance mandate, however, the president has potentially given millions of Americans the necessary standing to challenge his conduct. This is because the Affordable Care Act is a highly integrated law, with many of its key provisions dependent on each other. In addition to the employer mandate, the law also contains an “individual mandate,” requiring most Americans to sign up for a required level of health-insurance coverage or pay a penalty.

The individual mandate was one of the core parts of the Affordable Care Act considered by the Supreme Court in the 2012 case of NFIB v. Sebelius, where the court upheld the statute against constitutional attack. Throughout that litigation, the Obama administration portrayed the individual mandate as an “integral part of a comprehensive scheme of economic regulation” that included the employer insurance mandate, which was intended to give millions of Americans a way of meeting their new obligation to have health insurance. In other words, suspending the employer insurance mandate prevents the individual insurance mandate from working the way Congress intended.

Like the employer mandate, the individual mandate by law will take effect in January 2014 (unless the president postpones that as well). Individuals who will then have to buy their own health insurance will arguably have suffered an injury sufficient to give them standing to sue.

Once in court, these litigants can argue that the very integrated nature of the Affordable Care Act would make it unlawful to apply one part against them, while suspending another section. They can also argue that only Congress can determine whether, once a statute is fundamentally changed post-enactment, it should survive or fall.

This inquiry usually arises when courts, having invalidated on constitutional grounds part of a statute, must determine whether or not Congress would have wanted the valid remaining parts of the law to remain in effect. The relevant constitutional doctrine is called “severability.”

As the Supreme Court noted in the leading severability case, Ayotte v. Planned Parenthood of Northern New England (2006), the ultimate fate of the revised statute is decided based on the “legislative intent.” In the case of the Affordable Care Act, if the courts were, for example, to determine that the employer insurance mandate is unconstitutional, the well-established severability analysis would lead them to conclude that the individual mandate (and likely the entire law) must also fall because Congress did not intend those provisions to operate in the absence of the employer insurance mandate. The president’s suspension of that part of the law, therefore, should also produce the same result, rendering the remainder of the statute unenforceable.

This argument should find favor with judges who are weary of the use of suspension power that improperly aggrandizes presidential authority, diminishes congressional power, and denies the judiciary an opportunity to have its say. Courts would have to conclude that the whole statute must fall while the president’s suspension is in effect. While reaching this conclusion, they might also declare the suspension itself unconstitutional. Both results would mark a significant win for the American people.

By defining the mandate as a tax, one that will not be uniformly applied, the Supreme Court ran afoul of the Constitution.

By DAVID B. RIVKIN, JR. AND LEE A. CASEY

ObamaCare is being implemented, having been upheld as constitutional by the Supreme Court in June in a series of cases now known as National Federation of Independent Business v. HHS. It is becoming increasingly clear, however, that the court took a law that was flawed but potentially workable and transformed it into one that is almost certainly unworkable. More important, the justices also may have created new and fatal constitutional problems.

ObamaCare, or the Affordable Care Act, was conceived as a complex statutory scheme designed to provide Americans with near-universal health-care coverage and to effectively federalize the nation’s health-care system. The law’s core provision was an individual health-insurance purchase mandate, adopted by Congress as a “regulation” of interstate commerce. The provision required most Americans to buy federally determined minimum health-care insurance, or to pay a penalty more or less equivalent to the cost of that coverage.

Equally important were provisions requiring creation of state-run health-care insurance exchanges (where middle-income earners could obtain the prescribed coverage) and an expanded Medicaid program (also administered by the states) to cover people with incomes up to 133% (later upped to 138%) of the federal poverty level. An income of up to $31,809 for a family of four would qualify for Medicaid. States that failed to join in the Medicaid expansion were threatened with the loss of all federal Medicaid dollars, nearly a quarter of all state expenditures.

In the ObamaCare ruling, the Supreme Court correctly held that Congress could not impose the individual mandate as a constitutional regulation of interstate commerce and that Congress could not constitutionally use its spending power to coerce the states to expand Medicaid. Rather than strike down the law, however, the court construed the insurance-purchase mandate and its penalty as a “tax” on the failure to have health insurance. The justices also interpreted the Medicaid-expansion requirements as optional—permitting states to opt out of these provisions while staying within the traditional Medicaid program. Given that interpretation, the court’s majority upheld the statute as constitutional.

The court’s determination to preserve ObamaCare through “interpretation” has exacerbated the law’s original flaws to the point that it has become palpably unworkable. By transforming the penalties for failing to comply with the law’s requirements into a “tax,” the court has given the public a green light to ignore ObamaCare’s requirements when it is economically beneficial. Law-abiding individuals, who might otherwise have complied with the law’s expensive purchase mandate to avoid being subjected to financial penalties, can simply now choose to pay a tax and not sign up for coverage. There is certainly no stigma attached to simply paying a tax, and noncompliance with the law’s other requirements—such as those imposed on employers—is arguably made more attractive on the same basis. This effect fundamentally undercuts Congress’s original purpose, which was to expand health-care coverage to the greatest number of people, not to improve federal revenues.

Similarly, having reviewed the likely costs and benefits, states are now taking advantage of the court-granted flexibility. Seven states, including Texas, Mississippi and Georgia, have so far opted out of the Medicaid-expansion provisions, and eight (with more certain to come) are refusing to create the insurance exchanges, leaving this to a federal bureaucracy unequipped to handle these new administrative burdens. As a result, a growing number of low-income Americans will be unable to obtain the free or cost-effective insurance that Congress originally meant them to have, although they remain subject to the mandate-tax.

Policy problems aside, by transforming the mandate into a tax to avoid one set of constitutional problems (Congress having exceeded its constitutionally enumerated powers), the court has created another problem. If the mandate is an indirect tax, as the Supreme Court held, then the Constitution’s “Uniformity Clause” (Article I, Section 8, Clause 1) requires the tax to “be uniform throughout the United States.” The Framers adopted this provision so that a group of dominant states could not shift the federal tax burden to the others. It was yet another constitutional device that was simultaneously designed to protect federalism and safeguard individual liberty.

The Supreme Court has rarely considered the Uniformity Clause’s reach, but it cannot be ignored. The court also refused to impose meaningful limits on Congress’s power to regulate interstate commerce for decades after the 1930s, until justices began to re-establish the constitutional balance in the 1990s with decisions leading up to the ObamaCare ruling this summer. And although the court has upheld as “uniform” taxes that affect states differently in practice, precedent makes clear that a permissible tax must “operate with the same force and effect in every place where the subject of it is found,” as held in the Head Money Cases (1884). The ObamaCare tax arguably does not meet this standard.

ObamaCare provides that low-income taxpayers, who are nevertheless above the federal poverty line, can discharge their mandate-tax obligation by enrolling in the new, expanded Medicaid program, which serves as the functional equivalent of a tax credit. But that program will not now exist in every state because, as a matter of federal law, states can opt out. The actual tax burden will not be geographically uniform as the court’s precedents require.

Thus, having transformed the individual mandate into a tax, the court may face renewed challenges to ObamaCare on uniformity grounds. The justices will then confront a tough choice. Having earlier reinterpreted the mandate as a tax, they would be hard-pressed to approve the geographic disparity created when states opt out of the Medicaid expansion. But that possibility is inherent in a scheme that imposes a nominally uniform tax liability accompanied by the practical equivalent of a fully off-setting tax credit available only to those living in certain states. To uphold such a taxing scheme would eliminate any meaningful uniformity requirement—a result that the Constitution does not permit.

ObamaCare was always a poorly conceived and constitutionally deficient statute. The Supreme Court’s ruling upholding the law has simply made it worse. In the future, that decision is likely to be seen as a prime reason that the federal courts should judge and never legislate—even in the cause of rescuing an otherwise unconstitutional law from oblivion.

Messrs. Rivkin and Casey are lawyers in the Washington, D.C., office of Baker & Hostetler LLP. They pioneered the constitutional arguments against the individual mandate and represented 26 states in challenging ObamaCare before the trial and appellate courts.

A version of this article appeared December 6, 2012, on page A17 in the U.S. edition of The Wall Street Journal, with the headline: The Opening for a Fresh ObamaCare Challenge.

David Rivkin Analyzes the Supremes’ Decision at the Cato Institute’s annual Constitution Day symposium on Supreme Court rulings. The Chief Justice’s opinion expanded Congress’ taxing power in order to uphold the ObamaCare legislation.

FOR IMMEDIATE RELEASE

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PRLog (Press Release) – Sep 19, 2012 – Washington D.C. – The ObamaCare issue isn’t going away. While Chief Justice John Roberts’ opinion put limits on the Congress’ power to regulate citizens’ activity, it gutted limitations on Congress’ taxing power. So said constitutional attorney David Rivkin at the Cato Institute’s Annual Constitution Day symposium on the Supreme Court rulings. The symposium was held yesterday at the institute’s conference facility in Washington, D.C.

David Rivkin, who led the 26-state case against the U.S. government in Florida’s 11th District Court (whose judge, Roger Vinson, ruled in the plaintiffs’ favor), said that the Supreme Court decision in June was both “excellent and bad.” For years, Congress has enacted legislation that increasingly broadened its regulatory powers, assuming that any regulation is justified by the Constitution’s Commerce Clause. The Supreme Court decision put limits on Congress’ power to do so. For those interpreting the Constitution as limiting and enumerating the powers of government, this aspect of the ruling was good news.

Unfortunately, according to Rivkin, the Supreme Court’s decision to uphold ObamaCare required that they effectively rewrite the law and broaden Congress’ tax authority. They converted the individual mandate into a tax for not purchasing insurance. Rivkin asserted that this expansion of the taxing power enables Congress to tax inactivity—crossing a constitutional barrier into police powers that are generally reserved for the states.

Rivkin observed that the Supreme Court adheres to the principles of federalism, i.e., the dual sovereignty of the federal government and the states, only when ruling on laws that are not important—a position known as “fig leaf federalism.”

The Supreme Court’s ObamaCare decision is both a triumph and a tragedy for our constitutional system. On the plus side, as we have long argued in these pages and in the courts, the justices held that Congress’s power to regulate interstate commerce cannot support federal requirements imposed on Americans simply because they exist. The court also ruled that there are limits to Congress’s ability to use federal spending to force the states to adopt its preferred policies.

However, in upholding ObamaCare’s mandate that all Americans buy health insurance as a kind of “tax,” the court itself engaged in a quintessentially legislative activity—redrafting the law’s unambiguous text. The court struck down ObamaCare as enacted by Congress and upheld a new ObamaCare of its own making.

Congress grounded ObamaCare’s individual insurance coverage mandate in its power to regulate interstate commerce, supported by the Constitution’s Necessary and Proper Clause, which permits Congress to make all laws “necessary and proper” for carrying into effect its various enumerated powers. It relied on these constitutional provisions so as to avoid the clear political costs involved in simply raising taxes to create the universal health-care system ObamaCare’s backers really desired.

ObamaCare defenders, in the courts of law and public opinion, have been pressing these points for the last two years, and they lost. A majority of justices ruled that the Commerce Clause, even in conjunction with the Necessary and Proper Clause, cannot support federal regulation of “individuals as such, as opposed to their activities.”

This is a profound and highly significant reaffirmation of the Constitution’s federalist structure, which assigns only limited and enumerated powers to the federal government and reserves the power to enact broad health and welfare regulations to the states. Here, the court clearly rebuked Congress, sending a very clear message: There are judicially enforceable limits to your power.

Equally important, the court also ruled that the federal government cannot use its spending power to coerce the states into adopting federal programs and requirements. As originally enacted, ObamaCare required the states to expand their Medicaid programs so that they would cover those with incomes far above the federal poverty line. This would have shifted untold costs to the states, with the federal government paying these costs only for a limited time. The alternative that states faced was the loss of all federal Medicaid funding. Seven justices ruled that, applied in this manner, the law was unconstitutional and rewrote it to avoid this outcome. As a result, this federal hammer can no longer be used to force the states to support ObamaCare’s Medicaid expansion.

This is significant. Since deciding Steward Machine Co. v. Davis in 1937, the Supreme Court has maintained that the Constitution limits Congress’s power to coerce the States through federal grants, but it has never identified the boundaries between the permissible use of federal funding as a carrot and unconstitutional federal coercion. The ObamaCare decision began to draw those lines, putting real limits on Congress’s ability to use the states as simple administrative units to carry out its will.

On the debit side, the court upheld ObamaCare’s individual mandate as an exercise of the federal taxing power. The law was not passed as a tax, and both the president and ObamaCare’s congressional supporters persistently proclaimed that they were not raising taxes. The court itself was forced to concede that “the statute reads more naturally as a command to buy insurance than as a tax.”

In order to reach its conclusion that the mandate was a tax, and avoid the political fallout of striking down President Obama’s signature achievement in an election year, the court did more than overlook the statutory text’s natural meaning. It ignored congressional enactment of the mandate in a separate provision from any penalty. As Justices Scalia, Kennedy, Thomas and Alito wrote in dissent, “to say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it.” The perhaps unintended irony of this judicial edit is that politicians who wish to impose this type of mandate in the future will no longer be able to claim that they are not imposing a new tax.

The court’s ObamaCare opinion presents an uncertain legacy. The court reaffirmed and clarified the constitutional limits on Congress’s power to regulate commerce and to spend money. Yet the individual mandate and the law’s Medicaid expansion were upheld through judicial copyediting that the court has always found to be beyond its own constitutional power. The fact that this happened in the context of a hotly contested statute raises questions about the court’s ability to remain immune to political pressures.

Messrs. Rivkin and Casey are lawyers in the Washington, D.C., office of Baker & Hostetler LLP. They pioneered the constitutional arguments against the individual mandate and represented 26 states in challenging ObamaCare before the trial and appellate courts.

A version of this article appeared June 29, 2012, on page A13 in the U.S. edition of The Wall Street Journal, with the headline: The Court Rewrites ObamaCare.

Editor’s note: This op-ed was originally published on September 29, 1993.

The president has announced his health care plan, and congressional Republicans have announced theirs. Although the details are still murky, the plans seem to share one fundamental assumption — that every man, woman and child in the U.S. must participate in the system. The healthy must subsidize the sick; the young must subsidize the old; the not so old must subsidize the very young. If this redistribution of wealth is to work without new taxes (and no one wants to admit that new taxes might be necessary), then everyone must be in the plan.

Where, exactly, does the U.S. government get the power to require that every one of its citizens must participate in a government-sponsored health care plan? Ask this of a health care reformer and he, or she, will sniff, think a moment, and (if legally trained) will immediately utter the two most magic words in late 20th century constitutional jurisprudence—Commerce Clause.

If the legality of a health care package featuring federally mandated universal participation is litigated (and we can bet it will be), and the system is upheld, it will mark the final extension of this originally modest grant of federal authority. Thereafter, Congress will be able to regulate you not because of who you are, what you do for a living, or whether you use the interstate highways, but merely because you exist.

This was not, of course, the original plan. One of the fundamental tenets underlying the Constitution of 1787 was that the federal government was a government of limited powers. Unlike the states, which had more general authority to regulate their citizens, the federal government was to be limited to those powers found within the four corners of the Constitution. In particular, Congress could exercise only that authority specifically granted to it by the people and the states.

There was a list — and not a very long list. One of the powers enumerated on it was the “Power . . . To regulate Commerce with foreign Nations and among the several States.” One of the most serious deficiencies of the first union under the Articles of Confederation was that states were able to erect barriers to trade with other states and foreign countries. The Commerce Clause was added to the Constitution so that Congress could create the original North American free trade zone — within the U.S. itself.

The commerce power in the battered Constitution that emerged from the 1930s and 1940s, however, was very different. After being routed by President Roosevelt and his Congress, the Supreme Court fled to the Commerce Clause, finding there a way to avoid treading upon the vital interests of a Congress determined to regulate the economic relationships of the citizenry, not to mention its health, welfare and safety. In Wickard v. Filburn, in 1942, the court went so far as to rule that Congress could prevent a farmer from growing wheat for his own consumption. Too much of an effect on commerce, reasoned the court — this fellow gobbling wheat he grew himself. After all, he could have purchased it interstate. On that day, the Framers’ ghosts wept.

Of course, the commerce power was still, in theory, limited. In Wickard, after all, the man at least was a farmer, someone engaged in growing and selling foodstocks. Commerce was in the air, somewhere. And the court continued to pay at least lip service to the notion that the federal government is a government of limited authority, and that Congress can regulate only based upon some nexus to interstate commerce — or in reference to one of its other enumerated powers, like the power to tax and spend. So long as Congress provides a reasonable explanation of that nexus, its actions will be upheld. The limits of the contemporary Commerce Clause are not very clear, but most would agree there are some limits.

The final test, however, has come. In the new health care system, individuals will not be forced to belong because of their occupation, employment, or business activities — as in the case of Social Security. They will be dragooned into the system for no other reason than that they are people who are here. If the courts uphold Congress’s authority to impose this system, they must once and for all draw the curtain on the Constitution of 1787 and admit that there is nothing that Congress cannot do under the Commerce Clause. The polite fiction that we live under a government of limited powers must be discarded — Leviathan must be embraced.

The implications of this final extension of the commerce power are frightening. If Congress can regulate you because you are, then it can do anything to you not forbidden by the handful of restraints contained in the Bill of Rights. For example, if Congress thinks Americans are too fat — many are — and that this somehow will affect interstate commerce — who’s to say it doesn’t? — can it not decree that Americans shall lose weight? Indeed, under the new system, any activity that might increase the costs of health care might be regulatable.

If individuals can be regulated because of their health, then surely any activity with an impact on health also can be regulated. Perhaps one day it will be decided that every member of the new health care system — everybody — will be tested for the HIV virus. After all, your HIV status affects your health, the costs of health care, and, thus, interstate commerce. If a mandatory federal health system is justified under a Commerce Clause analysis, then any regulation of any health-related activity also can be justified.

Would the Bill of Rights intervene? Maybe, and maybe not. There is no specific right to eat when and how you like. There is no specific right not to undergo medical testing. The right against unreasonable searches and seizures? Perhaps. What about the “right to privacy”? It’s been overused, but maybe. The Supreme Court might well look into its penumbra crystal and find the necessary limitations — and maybe it won’t.

One thing is clear. Once Congress’s power is extended to every individual not because of his activities, but because he is, limits on its power will depend upon the fortitude and creativity of the courts. No American, whatever his policy views on health care reform, should rejoice at the disappearance of the last fragments of the principle that the federal government is one of limited powers. It is indeed ironic, and sad, that as the rest of the world is discovering the virtues of limiting their governments, the U.S. seems hellbent on unleashing its own.

—

Mr. Rivkin, an adjunct fellow at the American Enterprise Institute, served in the Reagan and Bush administrations. Lee A. Casey, also a former Reagan and Bush official, collaborated on this article.

As the nation awaits one of the most important Supreme Court decisions of our time, efforts to sway the decision toward upholding ObamaCare are not in short supply. Some have the thin veneer of news articles; others carry the weight of admonition by the President himself. One can only conclude that such efforts are based on a sober assessment that overturning at least one linchpin of the law is a very real possibility.

The editors of this newsletter recall vividly how the efforts of Messers Rivkin and Casey to call attention to the unconstitutionality of the 2010 healthcare law were met with derision by professors, legislators, and, unsurprisingly, reporters and news “analysts.” The hearty laughs and chuckles have long since ceased.

Lest readers believe that the legal argument against ObamaCare is grounded in political ideology, the editors of this newsletter present excerpts from articles penned by Rivkin or Casey to summarize the 26 states’ case against the federal government and to emphasize what’s at stake for the nation. —Editors

ObamaCare mandates that every American, with a few narrow exceptions, have a congressionally defined minimum level of health-insurance coverage. Noncompliance brings a substantial monetary penalty.

· The ultimate purpose of this “individual mandate” is to force young and healthy middle-class workers to subsidize those who need more coverage.
· Congress could have achieved this wealth transfer in perfectly constitutional ways. It could simply have imposed new taxes to pay for a national health system. But that would have come with a huge political price tag that neither Congress nor the president was prepared to pay.

Instead, Congress adopted the individual mandate, invoking its power to regulate interstate commerce. The uninsured, it reasoned, still use health services (for which some do not pay) and therefore have an impact on commerce, which Congress can regulate.
Congress’s reliance on the Commerce Clause to support the individual mandate was politically expedient, but constitutionally deficient. Congress’s power to regulate interstate commerce is broad but not limitless.

Congress has crossed a fundamental constitutional line. Neither the fact that every individual has some discernible impact on the economy, nor that virtually everyone will at some point in time use healthcare services, is a sufficient basis for federal regulation.

Nowhere in the Constitution can we find a provision to support the notion that “the ends justify the means.”

At stake are the Constitution’s structural guarantees of individual liberty, which limit governmental power and ensure political accountability by dividing that power between federal and state authorities.

Upholding ObamaCare would destroy this dual-sovereignty system, the most distinctive feature of American constitutionalism.

The arguments advanced by ObamaCare’s defenders are flawed because they admit no judicially enforceable limiting principle marking the outer bounds of federal authority.Messrs. Rivkin and Casey are lawyers who served in the Justice Department during the Reagan and George H.W. Bush administrations. They represented the 26 states in their challenge to ObamaCare before the trial and appellate courts.

The contents of this email include excerpts from an article that appeared March 21, 2012, with the headline: The Supreme Court Weighs ObamaCare.

Washington D.C. – As the U.S. awaits the Supreme Court decision on the Affordable Care Act (ObamaCare), the various factions pro and con continue to line up and weigh in on both whether and how the controversial law will stand. David Rivkin, who led the 26-state case against the U.S. government in Florida’s 11th District Court (whose judge, Roger Vinson, ruled in the plaintiffs’ favor, will meet Harvard Law professor Einer Elhauge, author of amicus briefs that assert the legality of the individual mandate. The debate is scheduled for 9:00 am, on Friday, June 15, at the Texas Bar Association’s Annual Conference in Houston.